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B&R Oil Co., Inc. v. Stoler

Court of Appeals of Indiana

May 30, 2017

B&R Oil Company, Inc., Empire Petroleum Partners, LLC, and EPP-Atlas Acquisition, LLC, Appellants-Defendants,
v.
William E. Stoler, Kathlyn Stoler, Jeffrey A. Levy, and Con-Serve, Inc., Appellees-Plaintiffs.

         Appeal from the St. Joseph Circuit Court The Honorable Michael G. Gotsch, Judge Trial Court Cause No. 71C01-1412-PL-353

          ATTORNEYS FOR APPELLANTS Tracy D. Knox Brian E. Casey Barnes & Thornburg LLP South Bend, Indiana

          ATTORNEYS FOR APPELLEES John A. Conway Paul Edgar Harold Stephen M. Judge LaDue Curran & Kuehn LLC South Bend, Indiana

          Najam, Judge.

         Statement of the Case

         [¶1] B&R Oil Company, Inc. ("B&R Oil"), Empire Petroleum Partners, LLC, and EPP-Atlas Acquisitions, LLC (we refer to the LLCs collectively as "Empire") bring this interlocutory appeal from the trial court's entry of summary judgment for William E. Stoler, Kathlyn Stoler, Jeffrey A. Levy, and Con-Serve, Inc. (collectively referred to as "the Stolers") on the Stolers' complaint for breach of contract against B&R Oil. B&R Oil and Empire raise three issues for our review, which we consolidate and restate as whether the undisputed designated evidence demonstrates, as a matter of law, that B&R Oil breached its lease agreements with the Stolers. As a matter of first impression in Indiana, we hold that a lessor may not circumvent a lessee's contractual right of first refusal to purchase the leased premises by submitting a third-party offer to the lessee in which the leased premises are bundled with other property. Accordingly, we affirm the trial court's summary judgment for the Stolers.

         Facts and Procedural History[1]

         [¶2] Beginning in the 1990s, the Stolers leased several parcels of real property from B&R Oil and began to operate gas stations on those properties. The leases were for initial three-year terms with options to renew. The Stolers regularly renewed their leases and continually operated the gas stations since first leasing the properties.

         [¶3] Pursuant to the lease agreements, the Stolers held rights of first refusal ("ROFR") that protected them against a third-party purchase of the leased premises. Specifically, each identical ROFR stated:

The Lessor hereby agrees that Lessees shall have, during the term of this lease, and so long as Lessees are in compliance with the terms hereof, the right of first refusal to purchase the leased premises. Accordingly, in the event that a bona fide offer to purchase the leased premises is presented to Lessor, Lessor shall give Lessees Fifteen (15) days for Lessees to make to Lessor a firm commitment to match said offer and to seek financing for the purchase of the property at said purchase price before Lessor sells its interest in the leased premises to a third party. Said Fifteen (15) day period shall commence when Lessors give to Lessee written notice of a bona fide offer to purchase. It is further agreed that, in the event that this right of first refusal is exercised by Lessees, that Lessor shall extend to Lessees the same terms for purchase that were extended to the party who originally made the bona fide offer to purchase which triggered the terms hereunder.

Appellants' App. Vol. V at 46, 59 (emphases added).

         [¶4] In 2014, B&R Oil signed a letter of intent to sell substantially all of its assets to Empire for approximately $80, 000, 000. Empire's purchase offer included the premises leased to the Stolers, at least sixteen other parcels of real property, fuel supply contracts for more than 100 sites, and various pieces of equipment. Thereafter, B&R Oil notified the Stolers that it had received Empire's third-party offer to purchase the leased premises and, accordingly, that B&R Oil was providing the Stolers "with a right of first refusal to purchase the Premises on the same terms and conditions set forth" by Empire within fifteen days of the notices. Id. at 71, 75.

         [¶5] The Stolers responded to B&R Oil and stated their intent to exercise the ROFR in each lease. Specifically, the Stolers informed B&R Oil that they would match Empire's offer "for the Premises" and requested that B&R Oil provide additional information regarding Empire's terms with respect to only the leased premises. Id. at 79-80. However, B&R Oil responded and informed the Stolers that, if they wished to exercise their ROFR, they would "be required to match the Offer and tender $80, 000, 000 for the Premises and all other assets included in the Offer."[2] Id. at 81, 83. The Stolers challenged B&R Oil's interpretation of the contract, stating that the attempt by B&R Oil "to force [the Stolers] to purchase substantially all of B&R [Oil's] assets to exercise their respective rights of first refusal constitutes both an anticipatory repudiation of the parties' leases and a[] breach of those leases." Id. at 86.

         [¶6] On December 22, 2014, the Stolers filed their lawsuit against B&R Oil and Empire. In their complaint, the Stolers alleged that B&R Oil had breached the lease agreements by not allowing the Stolers to purchase the leased premises before selling the premises to Empire. The Stolers sought monetary damages, specific performance, and/or injunctive relief. After the trial court denied the Stolers' requests for a temporary restraining order and a preliminary injunction, B&R Oil and Empire closed their transaction, and B&R Oil assigned the Stolers' lease agreements to Empire.

         [¶7] Thereafter, the parties each moved for summary judgment. After a hearing, the trial court granted partial summary judgment for the Stolers on their claim of breach of the lease agreements. The court denied summary judgment for B&R Oil and Empire and withheld ruling on the Stolers' proper remedy. The trial court certified its order for interlocutory appeal, which we accepted.

         Discussion and Decision

         Overview

         [¶8] B&R Oil and Empire (hereinafter collectively referred to as "B&R Oil") appeal the court's summary judgment for the Stolers. ...


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